Tuesday, February 26, 2008

This year's JCK will be much like yesterday's Oscars, a glum affair. Just as Oscars were boring, plain and un-trendy, JCK 2008 will be repetitive, uncreative and depressed. Just as writers strike was harbinger of things to come for Oscars, the recession fears bode a very bad omen for JCK 2008.

You can expect the usual players at the JCK but do not expect the "pizazz" and the dazzle at the show. The executives will be chasing hard to find deals. Like Oscars, you can expect a strong showing by international players. There will surely be a lot of companies from China who will be putting booths. But judging by the economy, I am skipping this yearly ritual in Vegas.

Is it worth it to fly to Vegas even if it seems to be a lackluster event? I do not think it is worth it to spend the time to this show. If you are genuinely interested then you are better of taking the 2007 list, visiting every company's website and talking to them on phone. Most of the companies will be very eager to get your business. If analyzing trend is the sole reason you want to visit Vegas, then I will suggest you sample your jewelry on the main page of all the prominent retailers. This will be a good substitute. With economy in dire straits, it will make sense to keep your expenses as low as possible.

It has been amazing as to how many people have contacted me about my series "Designing in Recession". That truly gives you an idea of whats weighing on people's minds these days.

Saturday, February 09, 2008

In finance speak, stones are like Options. Like "Options", they have a distinct intrinsic value and an extrinsic value called aspirational (emotional, beauty in the eyes of beholder) value. While it is difficult to value the extrinsic aspect of a stone, we can try to understand how an intrinsic value can be measured.

So, what does the intrinsic value of a stone mean? How do we quantify it? And what it means to an average Joe buying a synthetic? Below is our first crack at the factors trying to ascertain an intrinsic value of a stone.

Maintenance Value :- How much cost is incurred in maintaining a diamond such that it does not loose its value.

Replacement Value :- If you want to buy a similar stone at any point in time, how much would you have to pay. Ordinarily, the price should increase at least at the rate of inflation. This would mean that the intrinsic value is age-neutral. If the annualized price increase is greater than inflation then there is a higher rate of return and the intrinsic value increases with time. Some can argue that the replacement value can easily contain "extrinsic" component a stone's pricing. If some extrinsic component does get priced as intrinsic with time then it is only because of the intrinsic capabilities of a stone and it does not change regardless of who possesses it. For example, jewels that are placed in museums or are bestowed in crown jewels are special and have a higher intrinsic value.

Exchange Value :- If the stone can be exchanged with other stones of similar properties then it means that the stone is not exclusive enough. Thus, there is always an upper bound on a stone's replacement value which is determined by the market and not by the qualities of the stone.